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New capital requirement: “We will not succumb to blackmail” – SEC

By on March 12, 2014

The Securities and Exchange Commission (SEC) on Tuesday said it would not succumb to stockbrokers’ blackmail on the new capital requirements for capital market operators.

An authoritative source in SEC, who pleaded anonymity, told a reporter in Lagos that there was “no going back on the re-capitalisation”.

He said that the commission would not compromise its stance on the market standard because of the opposition of some stockbrokers to the re-capitalisation programme.

According to him, the market does not need many dealers with negative shareholders’ fund in the market.

The SEC source stressed that the commission would not compromise the market standard because of some brokers’ opposition and blackmail.

The source also said that the commission would not be part of the proposed “capital segmentation” being clamoured by the some dealers.

He said that the brokers should be more concerned on ways to raise the new capital instead of seeking for a meeting with the commission’s board.

NAN reports that a meeting of some stockbrokers with SEC executive management team ended in a deadlock.

Mr Emeka Madubuike, President, Association of Stockbroking Houses of Nigeria (ASHON), told NAN that the meeting did not yield any fruitful result as both parties failed to reach a compromise.

He said that the stockbrokers would seek audience with the commission’s board to discuss their reservations on the new capital requirement released by SEC.

NAN reports that SEC, on Dec. 19, issued new capital requirement for capital market operators with December 31 as deadline for operators to re-capitalise.

A breakdown of the new capital requirement obtained by NAN showed that a broker/dealer now requires a minimum capital N300 million, an increase of 328.57 per cent over the initial capital of N70 million.

A broker is now required to increase his capital to N200 million from N40 million, while a dealer’s minimum capital now stands at N100 million against the old N30 million.

An issuing house operational capital requirement also rose to N200 million from N150 million, while underwriters are now expected to have N200 million as working capital from N100 million.

Under the new capital requirements framework, a registrar’s operational capital has been reviewed up to N150 million from N50 million.

Trustees capital requirement also risen to N300 million from N40 million, while that of rating agency from N20 million to N150 million.

 

(NAN)